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To: patron_anejo_por_favor who wrote (33902)	11/5/2000 2:26:28 PM
From: re3	Respond to of 436258

from the toronto star today. Note the famous trio of words, "sell to whom" ho ho A tale of too much love for Nortel I wish I had been a fly on the wall at the investment-strategy meeting Oct. 23 at the giant World Opportunities Power Position E-Rage Fund Management Co. in Toronto. The last two years have been great for the WOPPER family of funds, with almost 80 per cent of total assets under management delivering first-quartile performance. Lead analyst Joe Stats was growing concerned, however, about the firm's heavy exposure to Nortel Networks Corp. because almost every WOPPER fund had a position in the stock. Stats thought the firm should begin to reduce exposure to Nortel for several reasons. First of all, he thought the stock was over-owned and over-loved. He knew many other funds also owned the stock, not to mention that the WOPPER index fund and other competing index funds were forced to buy more of the stock as Nortel's index weight kept increasing with the company's price. Stats thought the technical side of the stock was also weakening. The 10-week momentum numbers were in a downtrend all through 2000. On Aug. 25, the stock touched $124 and failed to exceed the prior high of $124.50, set on July 28. The stock was clearly running into some selling as the 40-week average volume was increasing and the price was not advancing. In September, Nortel slid to the low $90s and had just begun a weak rally from the 200-day moving average. Stats felt the price at the time, around $103, offered an opportunity to sell some stock and raise some cash. Stats made his case to the chief executive officer of WOPPER, Gordon Cheeseburger, who replied with a question: ``Sell to whom? All our competition is loaded up with Nortel, too.'' On Oct. 25, the buyers for Nortel vanished and the stock dropped 26 per cent, or $24.50, to close at $71.55. In the process, Nortel knocked the Toronto Stock Exchange 300 composite index down by 8 per cent. And it wasn't over yet. Nortel finished the week even lower, pulling the TSE 300 down 11 per cent for the week. Most WOPPER funds closed down, too, with one of the actively managed funds losing a stunning 13 per cent. Let me contrast the Nortel/technology love-in with the current hatred for metal and gold stocks. Technology stocks are still an easy sell to investors. These stocks have melted down, but many investors are still willing to buy an e-biz stock that once sold for $200 but has been beaten down to $5. Many such investors aren't willing to consider metal stocks at any price. Aside from the negative attitude investors have toward resource stocks, there is also the powerful U.S. dollar and the entrenched belief that inflation is dead. Our chart this week shows weekly closes of the U.S. dollar as calculated in an index from J. P. Morgan & Co. Inc. What's known as the Morgan Dollar measures the dollar's strength against a basket of currencies from Canada, Japan, Germany, France, Italy, the United Kingdom, Australia, Belgium, Denmark, Finland, Netherlands, Norway, Spain, Sweden, Switzerland, Greece, Austria and Portugal. You can find more information at jpmorgan.com on the Net. Also available from the site for downloading are tab-delimited text files containing monthly data from 1970 for each of the 19 currencies included in the narrow-measure currency basket. The strong Morgan Dollar has suppressed most commodity prices and in the process pushed U.S. interest rates down to 25-year lows. We could see all that good stuff unwind because our weekly chart points to a potential fall in the Morgan Dollar. It has been developing a bearish rising wedge, marked B on our chart, for most of 2000. Note that the current wedge is an extension of a larger wedge, marked A, that developed in mid-1998 through to early 2000. This pattern is almost always fatal. A breakdown of the dollar will have in immediate negative impact on North American interest rates and send metal prices upward. There is hope yet for the gold bugs. --------------------------------------------------------------------------------